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State Files Suit Against Mortgage Banks

Mass. Attorney General Martha Coakley filed a lawsuit on Dec. 1 against five national mortgage lenders, in what could be a setback for broader national negotiations.

Coakley announced the action at a Boston press conference, saying the banks used unlawful and deceptive foreclosure practices.

“This is the first comprehensive lawsuit seeking to attain accountability and real relief for the banks role and their misconduct in the foreclosure crisis,” she said.

The suit was filed in state court against Bank of America, Wells Fargo, JP Morgan Chase, Citi and GMAC.

Coalkey didn’t put a dollar figure on the amount the state is seeking but said “I think it will be a lot.”

The lawsuit could be another blow to broader negotiations with banks. Last October, attorneys general from all 50 states banded together to use their combined clout to pressure the banks to make dramatic loan modifications.

However, Coakley said she has lost confidence in the talks, claiming they’re moving too slowly and the banks are not taking responsibility for their actions.

“We always believed that you prepare for the eventuality of litigation. We’ve done that and don’t believe we can wait any longer," she said.

A spokesperson for JP Morgan said in a statement, "We are disappointed that Massachusetts would take this action now when negotiations are ongoing with the attorneys general and the federal government on a broader settlement that could bring immediate relief to Massachusetts borrowers rather than years of contested legal proceedings."

Iowa Attorney General Tom Miller, who’s in charge of the broader negotiations, said in a statement he’s still optimistic the coalition will settle on terms that will be in the best interests of the people of Massachusetts.